Now that we’ve put the U.S. NFP results behind us, we can shift our focus back on another sore spot in the global economy – Europe!
It’s said that the U.K. risks falling into its third recession in the last four years, but the manufacturing industry showed surprising resilience last month, expanding at its fastest pace since September 2011. Furthermore, the MPC seems to be optimistic about its Funding for Lending program judging by its last meeting minutes, so it’ll probably give it more time to work its magic.
Market junkies aren’t holding their breaths for the ECB to announce any changes to its monetary policy either. The consensus is for the bank to keep the interest rate steady at 0.75%. However, that doesn’t mean that the rate decision will be a snoozer!
Everyone will keep an ear out for what European central bankers have to say about the economy. Like the U.K., recent data from the euro zone has been mixed, but mostly downbeat. Manufacturing and services PMIs from the region showed contractions for December and have led many to believe that the recession in the euro zone might have deepened in the last quarter of 2012.
Though it will be pretty interesting to hear ECB head honcho Mario Draghi‘s economic outlook, majority believe that the bank will remain on hold for now. After all, there seems to be no urgent need for a rate cut. The OMT program has brought relief to the markets, bond yields are significantly below unsustainable levels, and we’ve been seeing signs of stability from Germany and France recently.